Blog Series: The Endowment Blueprint for Nonprofit Leaders
Part 2 of 3: Endowment Funds Demystified — How to Properly Account, Track & Report Endowments
This article is part two of our three-part series designed to make endowment accounting both understandable and actionable for nonprofit executives, finance leaders, and board members.
Blog Series: The Endowment Blueprint for Nonprofit Leaders
Part 1 of 3 - Understanding Endowment Funds: What Nonprofits Need to Know
Endowment funds play a crucial role in helping nonprofits build long-term financial stability. Yet many organizations still struggle to understand how these funds work, how they’re governed, and how to report them properly. Whether you’re new to endowments or looking to refresh your knowledge, this overview breaks down the essentials.
For nonprofits, revenue comes from two main sources, earned income and contributed revenue:
In-kind donations—also called gifts-in-kind—are non-cash contributions of goods or services. GAAP requires nonprofits to report them at fair market value (FMV), on a separate line item of the Statement of Activities for contributed nonfinancial assets. Beyond that, nonprofits must disclose how these donations were used, how they were valued, and whether donor restrictions apply.
For many nonprofits, grants are a lifeline—fueling programs, projects, and operations. But receiving the funds is only half the story. Proper recognition and allocation are essential to maintain compliance, ensure transparency, and preserve eligibility for future funding.
The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, brings sweeping tax changes that will touch nearly every corner of the nonprofit sector. While there are a few bright spots, much of the legislation introduces new costs, tighter rules, and more reporting requirements.
When a conditional contribution becomes unconditional, it’s time for your organization to recognize it as revenue. But that’s not the end of the story—another critical question follows:
In the nonprofit world, you’ve likely heard terms like donation, promise to give, and contribution used interchangeably. But each term has a specific meaning—and understanding the differences is critical for accurate financial reporting and compliance.
Running a nonprofit may not be about profits — but money absolutely matters. To fulfill your mission, serve your community, and grow your impact, your organization needs consistent, reliable funding. Understanding how to raise those funds — and how to measure what’s working — is vital for long-term sustainability.
Non-profit organizations operate with a mission-driven focus, but like for-profit businesses, they must track key performance indicators (KPIs) to ensure financial sustainability, operational efficiency, and mission impact. The right metrics can help leadership make informed decisions, attract donors, and improve program effectiveness. Below, we explore the most critical analytics and KPIs that every non-profit should focus on.
